Holding everything else unchanged, higher interest rates in foreign countries relative to interest rates
A) increase the demand and reduce the supply of dollars leading to an increase in the exchange rate.
B) decrease the demand and the supply of dollars leading to an decrease in the exchange rate.
C) increase the demand and the supply of dollars leading to an increase in the exchange rate.
D) decrease the demand and increase the supply of dollars leading to a decrease in the exchange rate
Ans: D) decrease the demand and increase the supply of dollars leading to a decrease in the exchange rate
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The law of supply states that there is a positive relationship between price and quantity supplied, ceteris paribus
Indicate whether the statement is true or false
Suppose government spending decreases by $100 billion and the marginal propensity to consume (MPC) is 0.8. Given this information, this decrease in government spending will cause a(n)
A) increase in equilibrium real GDP equal to $500 billion. B) increase in equilibrium real GDP equal to $800 billion. C) decrease in equilibrium real GDP equal to $800 billion. D) decrease in equilibrium real GDP equal to $500 billion.
Attacking inflation through wage/price controls is part of a
a. orthodox stabilization strategy b. response to inertial inflation c. strategy supported by the International Monetary Fund d. response to rapid money supply growth e. none of the above
The relationship between consumption and disposable income is such that as
A. consumption rises, disposable income falls. B. disposable income rises, consumption rises. C. disposable income rises, consumption falls. D. disposable income rises, saving falls.